RBI cracks down on bitcoin players, even as police arrest kingpin in Delhi

On a day when authorities arrested a Pune-based bitcoin 'entrepreneur’ in New Delhi, the Reserve Bank of India directed banks and others to cease all relationships with bitcoin players.

The RBI gave banks three months to end all existing relationships with bitcoin players. “Technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system,” said the RBI’s Statement on Developmental and Regulatory Policies. “However, Virtual Currencies (VCs), also variously referred to as crypto currencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering, among others.
The bank said it has repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies.
“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs,” said the central bank.
Meanwhile, the Pune police arrested Amit Bhardwaj, a bitcoin dealer, who has allegedly duped over 8,000 people to the tune of Rs2,000 crore, at Delhi airport on Thursday.
According to the police, Bhardwaj introduced bitcoins to India about four years ago when he started his operations in Delhi. He also owns several bitcoin mining operations including in China.
The Enforcement Directorate had also issued a lookout notice for Bhardwaj after he fled the country. He is alleged to have cheated investors in Mumbai, Pune and other cities in Maharashtra.